Governor Deval Patrick faces daunting budget challenges
and a political agenda that includes repairing infrastructure throughout the
state, improving public education and providing some financial relief to cities
and towns. The prospect of hundreds of millions of dollars a year in revenue
from gambling casinos must be tempting. Not only would three new casinos bring
in new revenue, but they would also allow the commonwealth to trap all those
dollars being spent by Massachusetts residents who now travel to Connecticut
when they want to place their bets. But like the gambler who hopes to wipe out
his debts with one big score (and rarely does), Patrick and other state
politicians may want to look at the consequences of relying on casinos to solve
Casinos can bring the state lots of revenue over $400
million a year is projected. And many Massachusetts residents will likely
change their gambling venues and opt to lose their money closer to home if the
three casinos the governor is proposing are built. But at the same time those
casinos may cost the state even more money in lost business and tax revenues,
hurt other businesses throughout the state, and create costs for taxpayers that
result from an increase in problem gambling.
If casinos become available in the state, more
Massachusetts residents will gamble. This will divert discretionary spending
away from other businesses. Dollars spent at casinos will be dollars not spent
in restaurants, furniture and clothing stores, movie theaters, and many other
businesses. Even revenue for the state lottery could be expected to decline.
Research by William Thompson of the University of Nevada estimated that with
the introduction casino-style gambling in Pennsylvania, “local areas will lose approximately $267 million annually from their
According to many studies, the closer a casino is to where
people live; the more likely they are to develop gambling problems. Research
done for the 1999 National Gambling Impact Study Commission found that “the availability of a casino within 50
miles is associated with about double the prevalence of problem and
pathological gamblers.” The Commission also reported that the average cost
of each of these gamblers to other residents and businesses in a state, in
terms of lost productivity, unemployment and welfare benefits, health care, and
other activities is approximately $2,000 per year. And that doesn’t take into
account the costs of the problem gambler’s unpaid debts, bankruptcies and
white-collar crimes, such as embezzlement and insurance and credit card fraud,
and the criminal justice costs of prosecution.
The Commission concluded that in four New England states,
including Massachusetts, 4.2 percent of residents (273,000 in the Commonwealth)
are at risk of becoming problem or pathological gamblers. The math is simple:
273,000 Massachusetts residents multiplied by $2,000 equals $546 million a year
in costs. In addition, according to a number of researchers and therapists,
although problem gamblers are a small percentage of the population, they
account for as much as 25 to 50 percent of a casino’s revenues.
Of course, not all of those at risk will develop gambling
problems, but with casinos closer to home many will. And taxpayers and business
people who may never set foot in a casino will end up paying for it. Add to this the economic loss to other
businesses in the state that depend on discretionary spending and the
additional costs of unpaid debts and white-collar crimes, and it’s not hard to
envision casinos doing more harm than good to the state’s financial well being.
Massachusetts political and business leaders would do well
to examine the experiences of other states that have dealt with casinos. In
Iowa, less than four years after casinos were legalized, problem gambling more
than tripled. In South Dakota, five years after casinos opened in the town of
Deadwood, the state’s attorney testified before a congressional committee about
the large numbers of people who had no previous criminal record who had since
turned to crime to cover gambling losses. And after years of concerns about the
consequences of casinos in Connecticut, legislators there recently voted to
initiate a major gambling impact study.
Before the first person loses a
dollar in Massachusetts slot machine, Governor Patrick and the state’s
legislators need to make sure they know the gamble they are really taking. It’s
too easy to simply rely on the fantasy of an easy score.
--Robert Goodman is the author of The
Luck Business and was former director of the United States Gambling
Research Institute (USGRI). He teaches public policy and environmental design
at Hampshire College in Amherst.
--Stephen J. Simurda was associate director of
the USGRI and teaches journalism at the University of Massachusetts, Amherst.